Community Viewpoint: Failed housing policy, in perpetuity

Following a decision by the owner of a Lahaina “affordable housing” complex to sell its 142 units at market prices starting in 2019 — three decades earlier than expected — there is movement at the Maui County Council to require that all of Maui’s so-called affordable housing to remain so in perpetuity.

Councilwoman Elle Cochran introduced a measure in October to that effect, but the committee delayed action on it. However, the bill and other similar policy proposals may materialize later this year. At the state Legislature, for example, Sen. Roz Baker of Maui has introduced a bill to keep the Front Street apartments at affordable rates. A similar bill died last year.

The goal of Cochran’s proposal is to increase the amount of affordable housing in Maui County by preventing affordable units from ever being sold at market prices. However, this strategy has already been tried, and it nearly brought housing development on Maui to a halt.

In 2006, a new county zoning law required new affordable rental properties to remain at affordable prices forever. From 2006 to 2014, only 12 housing units were built under the county’s affordable-housing law, according to Housing and Human Concerns Director Carol Reimann. A housing unit is defined as a single apartment unit in a complex or a house.

In 2014, the affordability requirements were revised to 30 years. Since then, 1,046 housing units were initiated, an increase of more than 16,000 percent.

It makes sense. From a developer’s perspective, housing projects with “affordable” (below-market) rates in perpetuity are less attractive than housing projects with fewer restrictions. Because these projects come with a higher risk of losing money, some developers will simply build in counties that don’t impose these restrictions, or not build at all.

The state Department of Business, Economic Development, and Tourism predicted in 2015 that Maui county would need up to 13,949 new units between 2015 and 2025. Housing development isn’t on track to meet this goal, and reverting to perpetuity requirements could knock Maui even further off course. Forcing affordable housing projects to remain so in perpetuity would only discourage conventional developers — and even charitable organizations — from building homes at all.

In testimony submitted Dec. 14 to the Council’s Housing, Human Services, and Transportation Committee, nonprofit developer Habitat for Humanity Maui said approval of the proposal would “eliminate funding to Habitat in its entirety.”

Sherri Dodson, executive director of the nonprofit, explained that Habitat for Humanity Maui’s development model goes beyond simply providing affordable rent. Its goal is also to promote independence and wealth in the families it partners with. These families generally are living paycheck to paycheck, but upon completion of a 30-year-affordability contract, they walk away with their own market-rate home. If these homes were prevented from transitioning into market-rate homes, Habitat for Humanity Maui would no longer be able to offer this charitable service.

If Cochran’s bill were enacted, at least one nonprofit in the county would still be able to make use of the county’s affordable housing funds: Na Hale O Maui. But other nonprofits, such as Habitat for Humanity and Lokahi Pacific, have policies that do not fit with the “affordability in perpetuity” concept.

This is not to say that Maui doesn’t need affordable housing programs, only that this is the wrong path to take.

What Maui really needs is an environment that encourages home development generally. Affordable housing projects alone will not solve Maui’s housing shortage. Subsidizing housing should not be a primary plan, but instead a temporary fix.

With a broader policy that encourages housing development generally, developers would be able to build houses at so-called affordable rates — providing options that go beyond government-mandated minimums — as well as more market-rate housing that would reduce or at least stabilize housing prices overall.

At the very least, Maui county must not revive a policy that has already failed and is likely to fail in perpetuity.

Aaron Lief

Aaron Lief is a researcher at the Grassroot Institute of Hawaii, an independent non-profit research organization.

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